Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/30477 
Year of Publication: 
2009
Series/Report no.: 
CESifo Working Paper No. 2730
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Institutions are important for proper economic performance, but are replaceable by trust or other social norms. We show that when proper institutions and trust are missing, integrity of the individuals can replace them. We construct a model of a transactions-based economy with contracts preceding the transactions, and show that any one of (1) institutions, (2) trust, or (3) integrity, foster economic growth. We construct data of economic performance of social groups in Lebanon, measure integrity and other values of these groups, and use this data and data from Kenya to support one of the model's predictions. Policy implications are discussed.
Subjects: 
economic development
institutions
integrity
Lebanon
social norms
trust
JEL: 
A13
C73
E19
O43
Z10
Document Type: 
Working Paper
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